Wednesday, September 12, 2012

Apple Inc. (NASDAQ:AAPL) to Launch Pandora -like custom radio service

Apple Inc.(NASDAQ:AAPL) is quietly working on a custom-radio service on the lines of Pandora Media Inc(NYSE:P), the Wall Street Journal reported a couple of days back.

The Journal, quoting sources, said that the radio service would run on hardware made by Apple and "possibly on PCs running Microsoft Corp's Windows operating system."

Since Apple likes to route everything through its iTunes service, it is more than likely that the new service might be part of iTunes rather than a separate application.

However, significantly, the radio-streaming service would not work on devices running Google's Android operating system, the journal reported.

Pandora and more recently, Spotify, are popular and well-known brand names and have been around for a long time. However for Apple the radio streaming service might be branding exercise rather than an attempt to get into the sector as sch.

The WSJ points out that Pandora has yet to report a profit despite a revenue growth of 51 percent, as royalty costs for streaming music are very high. This eats into subscription revenues that it gets.

If Apple wants to make it a profitable venture it has to avoid the struggles that Pandora is going through.

WSJ said, quoting sources, "the licenses Apple is seeking may let it sidestep certain restrictions that typically apply to online radio, including a ban on playing any given song too frequently."

Also Apple is "negotiating for its own licensing deals with record companies, rather than paying royalty rates set by the federal government, like Pandora does."

The WSJ noted that Apple only recently started licensing negotiations but, "people familiar with the current talks say they appear to be more serious than those previous tentative inquiries."

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